Impacts of Augmented Reality on Real Estate
Click here to view the event recording.
Moderator: Marcus Raynor, Colliers
Presenter: Neil Mandt, CEO, Layer Group
Presenter: Karen Whitt, President of Real Estate Management Services for the US, Colliers
For this week’s edition of the Plugged In series, CoreNet took a break from COVID-19 coverage to explore a different topic that is also going to have profound impacts on the way we think about real estate in the not-so-distant future, augmented reality (AR). The subject matter experts, Neil Mandt and Karen Whitt, walked us through several examples of how this new interface poses challenges and opportunities for landlords and tenants as buildings, parks and even private property are on their way to becoming live action billboards.
To lead this conversation, Marcus Raynor invited Neil Mandt, CEO of The Layer Group, to share a presentation on how AR will soon become part of the everyday urban landscape. Previously a five-time Emmy award winning producer, Mandt left television to explore the possibilities with AR, and co-founded The Layer Group, a consulting group that advises landlords and property managers on how to protect themselves and profit from the growing AR market. Neil was accompanied by Karen Whitt, President of Real Estate Management Services for the U.S. at Colliers, and the two led a thought-provoking presentation that was enlightening, and even a bit unsettling, about how AR will change the face of the built environment as we know it.
Before diving into the material, Mandt told the sizable CoreNet audience of that “a lot of this sounds futuristic. It sounds unlikely that it exists in the market, and it sounds unlikely that you will adopt it. But everything is likely, and you will adopt everything.”
Background: What is Immersive Media?
Immersive media continues to become a larger part of our everyday lives. It is even a useful tool in the real estate process, with 3D space scans, and the ability to overlay virtual test-fits as one common example. Immersive Media, also called Extended Reality (XR), is the umbrella category that includes Virtual Reality (VR), Augmented Reality (AR) and Mixed Reality.
As explained by Mandt, AR is when a technology device is used to superimpose an image into the real world. The image is not tangible, but it certainly exists in that space. The most popular real-world example of this is Pokemon Go.
Unlike VR, which closes out the real world and replaces it with a new one, AR enhances the existing environment and builds on top of it.
In today’s world, companies use different media to advertise their brands, disseminate information, develop thought leadership and interact with customers. The way companies use media will only continue to grow and evolve, and many are already looking across the spectrum of XR to find the most impactful ways to reach their audience.
In Mandt’s opinion, “all companies should be considered media companies because of the way we interact with customers.” According to Mandt’s statistics, consumers retain 70% more information when experiencing an advertisement in AR versus two-dimensional. They are also 20 times more likely to engage with AR than a standard online advertisement. There is no question that AR will be the medium of choice within the next decade.
Augmented Reality: Where is it taking us?
Back in 2016, Tim Cook, CEO of Apple, said that using AR will become as normal as “eating three meals a day,” and he continues to be one of its loudest advocates. In January this year, Cook told his employees on their earnings call that AR is “going to pervade your life.”
Mandt explains why this is so significant. It may be hard to picture now, but in 10 years, there could be no smartphones. This device will be replaced, most likely by glasses or some type of headpiece, that is AR-enabled. You will be bombarded by virtual images through this device.
The world is moving toward spatial computing. Digital information will be placed on top of your reality, making buildings and landscapes a canvas for visual stimulation.
One example that Mandt gave was especially well-received by the audience. Imagine that you are in NYC and using Google Maps on your phone. You emerge from the subway and are instructed to head North. You may not have your bearings and instinctively know which way is north, so you take a guess and check to see if your blue dot moves in the correct direction. With AR, your Google Maps will instead be a real image of your exact view, overlaid with virtual arrows on the actual street. Additionally, all of the buildings around you have their information displayed to give you even more context.
Google Maps will become a Live Map. Information will interact with the environment, not block it or replace it with a similar yet false one. Facebook Reality Labs is also creating this type of software, as our many other key innovators.
Who Controls the Augmented City?
Right now, it’s the “Wild West,” which will get very dangerous, Mandt warns. AR is going to bring up new questions around what it means to occupy space.
For example, in 2017, SnapChat launched an AR “art exhibit” around the world, which featured Jeff Koons’ Balloon Dog in Central Park. Spectators with SnapChat could use the App to see the dog in the park. These users walked into Central Park to the exact location, then opened the app, and a giant image of the Balloon Dog appeared in front of them like magic.
SnapChat did not ask for permission or obtain any permits to launch this exhibit. In Mandt’s words, “everyone was asleep” when it happened. Because the dog did not visibly take up physical space for most people, SnapChat basically hid under the radar the entire time.
This example is problematic for many reasons. First, it is illegal to have any form of money-making stand in Central Park; children cannot even set-up a lemonade stand. However, SnapChat made plenty of money off of this “art exhibit.” Second, imagine that this exhibit wasn’t in Central Park, but in random places throughout the city. One could land on your private property, bringing thousands of people into your space without your knowledge or consent. If apps are making money off of this, then are you entitled to some of the profit? If someone gets injured on your property because of the app, are you liable?
Pokemon Go faced the same issues. They got away with creating a money-making game that caused people to flock to certain locations to capture the Pokemon creatures because they claimed that nothing is really there, so it’s harmless. However, something did occupy the 3D space, and it does impact the surrounding environment. Businesses had crowds of people blocking entrances and potentially keeping away customers because the Pokemon Go crowd discovered a virtual creature in that place. If Pokemon made money off this game, then should they have to share it with the property owners and tenants who unknowingly allowed them to use their space? If an image exists only in AR, then is it considered to take up physical space in reality?
AR Rights: A New Phrase in Leasing
AR has already taken over building facades without permission, similarly to the Central Park Balloon Animal and the Pokemon Go examples. Billboards are able to come alive and speak to individuals, using corporate buildings as their setting, so landlords and tenants may want to have some control over the messages conveyed in the ads. Not to mention, this has the potential to be a huge revenue stream.
Karen Whitt of Colliers has already helped several tenants write clauses into their leases to protect their facades from unwelcomed AR. Whitt believes that AR rights will soon be the new air rights, which protect the unused space above a building. Similar to air rights, AR rights will have to exist to protect the space around the building. For instance, AR rights will help protect tenants from outside advertising that they may oppose or help landlords be fairly compensated for outside vendors utilizing their assets.
Also, AR rights could allow each tenant to use its space to generate capital instead of only the landlord cashing in on the space. AR rights could even be sold separately to tenants. It is too early to tell what the new normal will be, but Whitt and other real estate brokers are already having these conversations and pioneering AR rights in terms of property leasing.
Advertising with AR
Smart advertising and marketing already exist today, as companies target individuals with products that they’re likely to buy based on their behaviors, search history and location. The same concept will happen with AR. Two people could look at the same building and see two different advertisements. The space for selling advertising could be endless for landlords, and exclusivity rights could be sold to advertisers at a premium.
However, Whitt points out that real estate is an industry built on trust. People trust their buildings, and AR advertising may exploit this public confidence in a dangerous way. For example, a hospital is full of trusted doctors. What if a 3D doctor appears on the hospital to tell you about a new drug that he or she highly recommends? It could be confusing for consumers and hospitals could be liable.
The most shocking real-life example is when SnapChat released a trailer for the new Bhad Bhabie show on the side of a corporate office building in Sunset Strip, Los Angeles. For passersby with the app, they could scan the building to see an AR version of the 15-year-old rapper come alive and say some wildly inappropriate comments to her fans and even random strangers. The landlord had no idea Bhad Bhabie was on their building, and once again, SnapChat made more money by exploiting their building facade.
On the other hand, The Lego Company found a more diplomatic way to utilize AR in to generate revenue that was beneficial for property owners as well. During London Fashion Week in 2019, Lego brought AR to an empty store with a pop-up called “The Missing Piece.” Snapchat users scanned the code at the door before entering the seemingly raw space and watched it turn into a Lego party with a DJ, arcade machines, a bouncer and mannequins showcasing streetwear, all made from Legos. Customers could enjoy the experience through their devices, which also included a Shop Now feature. Lego generated revenue and drove brand interaction with clientele, and the landlord could easily clean up the space and do it all over again for another interested company very quickly.
What’s Next for AR
The implications of this technology are vast, and we are only in the early stages. Mandt points out that AR will only be fully enabled when 5G is introduced and can seamlessly drop the information to devices. This 5G technology will bypass the need to download and interact with apps.
All the major tech firms are already investing in research and development of wearable devices to be available when this happens. Facebook has teamed up with Ray Ban to replace smart phones with their glasses; Apple has already announced that their next product launch is going to be their smart glasses. Historically, Apple never announces what their product is going to be before the launch, but they recognize the need to educate consumers earlier with this new piece.
Whether you are a landlord, tenant, real estate professional, or resident of an urban area, there is no doubt that AR will have profound impacts on our daily lives and our relationship with the built environment. AR will impact the way we operate in the physical world. The definition of being a space occupier may have to be adjusted. And an even more dramatic thought: we may have to say goodbye to our beloved, yet antiquated, smart phones.